Month: January 2012

I’m listening and watching with fascination to Keith Scovell‘s Shopper Power videos. In these Keith describes progress being made in a VRM direction by retailers and their upstream suppliers, detailing efforts made by Starbucks, Hallmark, CVS, Tesco/Homeplus, Frito-Lay, Reese’s and other companies — all recognizing that customers’ range of control over interactions in retail environments is increasing dramatically, and will increase a great deal more.

I haven’t watched all of Keith’s videos yet, but I’m taking notes as I do, and I recommend that others do the same, if they’re interested in how increasingly empowered and independent customers relate to vendors — especially at the retail level in the brick & mortar world. And how clueful vendors are working on better ways of interacting with those customers.

It’s interesting that Keith is coming from the CPG — Consumer Packaged Goods — industry, and not CRM, which is most commonly posed as the counterpart to VRM. Yet I think that CPG, and retailing in general, is the more direct counterpart of VRM. Talking about where the rubber meets the road here. Keith talks about market signals, which go in both directions. One purpose of VRM is to provide better means for signaling, as well as for engaging over the longer term.

Four things are important to point out as developers on both sides get acquainted:

Customers will become more independent. That is, they will have their own ways of expressing demand, loyalty, brand preferences and terms of engagement. Many of today’s solutions on the vendors’ side — loyalty cards, for example — are both coercive and inconvenient, as customers are required to carry around many of these things, all with their own proprietary and silo’d systems. New tools and systems will emerge on the customer’s side to provide both independence and better means of engagement. And those tools and systems will be personal, not just social.

VRM tools will not only provide or support that independence, but common means for engaging many vendors the same way. For example, they will provide ways for a customer to change his or her address one time for many vendors rather than many times for many vendors.

The new market ecosystem will be symbiotic one between demand and supply. Not a coercive or competitive one. That means the best customers and the best vendors will be caring about each other and watching out for each others’ best interests. This will actually reduce need on the vendors’ side for discounts, coupons and other gimmicks, which often clutter and confuse an otherwise smooth relationship with customers, and which have other hard costs as well.

New user interface elements will be required.

For that last two reasons I’ve flanked the text above between two r-buttons. Keith visits QR codes and other handy signaling devices already being used in the retail environment. But it’s still early, so we still lack are user interface (UI) elements that represent actions and states within relationships between buyers and sellers. As work in the VRM development community goes on the demand side moves toward work Keith and others are doing on the supply side, the two magnets will place a new force field over the marketplace: one that brings mutual interests into alignment, even as competition and other familiar market interactions continue as they always have.

Customer Commons is about us.

Customer Commons is a companion organization to ProjectVRM, and in the long run will be its successor. Think of ProjectVRM as the launch pad and rocket for getting VRM development and research into orbit — and of Customer Commons as the rest of the universe.

So the future is wide open.

SOPA, however, is about enclosing some of the Universe’s commons, which is essentially NEA:

Nobody owns it

Everybody can use it

Anybody can improve it

What would we — the 100% who are customers — be doing about SOPA?

Customer Commons is just in the planning stages now. We want it up and running by the time The Intention Economy: When Customers Take Charge comes out in May. What should it be and how would it work?

All thoughts welcome.

P.S. ProjectVRM is a Berkman Center project, and therefore does not take an advocacy position on matters of public debate, such as SOPA — which is why this blog is not offline or blacked out today.

There are so many excellent comments and questions following my last post, Consumers are social, Customers are personal, that I decided it would make more sense to address them in a new post than in comments under that one. So here goes.

I’m interested in your comment that social media is only semi-personal – could you expand on that point?

I think what you could be getting at is the current lack of tie up between social identity and customer records, which is a challenge (but one that can be overcome), and one we are working on. Or do you mean something else?

There can be additional benefits to customers for taking their customer service issues into social media over other channels. Once companies wake up to the fact that there are public complaints and issues on their Facebook pages, in tweets when people search for their company names etc, they will often start delivering better customer service over social than they do through other channels. The fully public nature of the issues and resolutions forces them to deliver the best service they can. I believe this will drive a virtuous circle – as companies deliver better service through social, more and more customers will begin to use it as a service channel.

First, I want to make clear that when we talk about “social media” today we mostly mean Facebook, Twitter, Google+, and other commercial services. Not telephony, email, texting, instant messaging and other social activities that have been around for a long time but tend not to get included in the “social media” category.

Three things make social media less than fully personal:

As CRM Software said in another commment, “your conversations are personal yet public.”

We don’t own social media. Yes, we use them, but they are not ours. They belong to Twitter, Facebook, Google or whomever. For what it’s worth (and it’s a lot), we can own domains on the Web and elsewhere. We can own email systems. We can own IM systems. We can be our own publishers, syndicate our own postings. Standards and protocols such as TCP/IP, HTTP, IMAP, POP3, SMTP, RSS and XMPP make that possible. Those standards and protocols give us independence, which is a founding virtue of the Net, of the Web, of blogging, of instant messaging. Those standards and protocols are used by social media, but we remain dependent rather than independent within social media environments. So it is critically important to remember and preserve the distinction between independence and dependence on the Net.

Social media are designed to be personal, but in a social context. Facebook is for sharing with friends. Twitter is for following others and being followed. Linkedin is for sharing personal profiles. Google+ is for “real life sharing,” they say. Sure, we can get personal benefits out of social media, but as a collateral benefit more than as a core purpose.

The thing is, when all you’ve got are social hammers, even personal problems look like social nails. And this is what we are doing when we use social media to fix the problems of CRM and customer service, on either the vendor’s side or the customer’s. Yes, lots of progress has been made on the sCRM front, Conversocial is a leader in that movement, is clearly doing a good job, and should continue doing that. Yet, as individual customers we still lack a box of tools that are ours alone, and that help us relate personally with the companies whose goods and services we buy and use.

About identity: yes, it’s critical. The quesitons around it are huge. For example, are we — as sovereign, independent and self-actualized human beings — who we say we are? Or are we reducible to our @-handles and “social identities” on the likes of Facebook? When Mark Zuckerbergintroduced Facebook Connect in 2008, he said it would make it easy “for you to take your online identity with you all over the Web.” Note the presumption: that your handle with Facebook is “your online identity.” Sorry, but it isn’t. It’s handy as a shortcut, but it’s not who you are.

But in fact I was talking about something other than identity in that last post. I was talking about working on what’s personal in more than just social ways.

Louis Columbus writes,

1. The depth and breadth of personal information being shared on social media is creating advertised-based business models that will surpass Google AdWords’ revenue within five years or less. That’s coming thanks to the torrent of data that streams into social networks daily.

2. Improving customer service systems is indeed not enough because it still doesn’t strike to the center of what really needs to happen. Companies need to translate process efficiencies into more relevant, timely and focused customer experiences. The dividend of process efficiency needs to be spent on greater empathy for the customer. Profits will follow if a company can get its head around the concept of delivering an exceptional experience.

3. VRM shows potential to make each interaction more relevant, focused and over time, trusted.

Bottom line: the companies who will emerge stronger for all this turbulent change will stay focused on customer experience, empathy and intimacy as their compass and not waiver from that course.

Louis’ predictions about the future of advertising may be true. But remember: even highly personalized advertising is still guesswork. And no amount of personal data can empower any company, no matter how smart, to guess what I want or need next. Nor do I want that. First, most of the time I’m not buying anything. Second, when I am ready to buy something, I need instruments that help me express my intentions more than I need ones that are guessing what I might want and pushing something at me through a medium that’s paid to do the pushing.

This is why I believe what will emerge over the next five years is not a more personal attention economy (led by social media) but an intention economy, based on what customers actually want. This is why I wrote The Intention Economy: When Customers Take Charge, for Harvard Business Review Press, which is due to hit the shelves on May 1.

I agree with Louis’ second point about what companies need to do; and will add that the customer experience should be one for which the customer is at least partly responsible. Also that the experience of relationship should extend across many vendors in the same way, rather than working in isolation with each vendor. For example, I would like as a customer to experience changing my address with many vendors at once. No vendor working alone with one CRM system can deliver this experience. VRM is required for that, along with CRM systems that welcome simple and standard address-changing methods that work the same way across many different vendors.

I also agree with Louis’ bottom line: that vendors will have to be “focused on customer experience, empathy and intimacy.” And I believe this will require that customers welcome VRM tools when customers carry their own weight on their own sides of relationships.

One additional thought about the future of social media: Today, social media is funded by advertisers (the real “customers”), and provides a mechanism for giving them access to consumers. But this will almost certainly change as more and more social media services and platforms become open source. An open-source, community-developed platform for social interaction will unify consumers and customers, no?

When Twitter first appeared on the scene, for example, it took many months before the first commercial money began funding it. The consumers it served all worried that without some kind of external funding, the service might disappear. Sooner or later, we’ll find that IT and communications costs have become so low that very little, if any, commercial sponsorship will be required to sustain a genuinely consumer-oriented social media platform.

I also think we need to free ourselves from the knee-jerk belief that commercial sponsorship is the first-option business model for popular services on the Net. The successes of the Net, the Web, email, RSS and much else have long since disproven that belief.

In the long run far more economic activity will be supported by free and open standards, protocols and other building materials, than by commercial services paid for by advertising.

As for the promise of both social media “big data” for better customer relations, I like what Alan Mitchell said in his comment:

…there is a vast difference between the sharing of unstructured information on a one-to-many basis (social media), and the sharing of structured information on a one-to-one basis (VRM). As you point out, only the latter allows for real personalisation.

Can you please get in touch with an economics scholar you trust and ask her to sort out the difference in definitions?

It is quite true that we are upstream suppliers of valuable content to social media, and not just consumers of services, and Hanan makes many good points at that link.

As for distinctions between consumers and customers, I like what Doug Rauch — the former President of Trader Joe’s — told to me when I was working on my book: that consumers are “a statistical category.” “We believe in honesty and directness between human beings,” Doug said. “We do this by engaging with the whole person, rather than just with the part that ‘consumes.'”

Social media are a partial and temporary solution at best to a pair of linked problems that are essentially personal:

dysfunctional customer relationship management on the vendor’s side; and

minimal vendor relationship management on the customer’s side.

In the absence of solutions to both problems, vendors still see customers as consumers, and that too is a problem that hasn’t yet come to a head, because we still don’t fully grok the difference between consumers and customers. As a result, we think social media looks like a the good answer rather than a better question. That question is, How can we get companies and media to stop treating us as consumers and start treating us as real customers?

“…more than 60% of complaints and question about retailers posted online on social media are ignored, in part because of the sheer volume of content created on sites like Twitter and Facebook.”

“30% of the retail chains surveyed don’t respond to any questions or complaints posted on social media, effectively choosing to ignore issues mentioned in these forums.”

“…78% believe that social media platforms will soon replace other means of customer service altogether or at least become one of the top ways to communicate with corporations.”

“…among the group which has communicated with companies via social media, 32.5% said they were either neglected or totally ignored; that works out to 16.5% of the total…This included ‘inadequate response times, unanswered queries, and overall unmet expectations.’

“What’s more, ‘respondents were also adamant that such corporate behaviors would have some or much effect on their future decision to do business with offending corporations.’

“27.3% of respondents said being ignored by companies on social media makes them ‘very angry,’ and 27.1% said they’d stop doing business with the offending company altogether.”

“88.3% of respondents said they’d be somewhat or far less likely to do business with a company that has visibly ignored other customers’ questions or complaints on social media. That includes 49.5% who said they would be ‘far less likely, and 38.8% who said they’d be ‘somewhat less likely.'”

Note that the blame here is on offending companies; not on social media, or on the absence of something better.

This is understandable because social media offer radically new and helpful avenues both for customer feedback one one side and customer support on the other. Also, social media is where Conversocial is coming from, and what MediaPost reports on. The problem for both — and for all of us thinking and talking about this stuff inside the social media framework — is that consumers are a statistical category while customers are individual human beings.

Individual human beings are all different. They are not categories, and they cannot be treated with full respect only by templates, which is what vendors — especially those serving mass markets — tend to use.

And, while social media do provide ways to get personal (say, though one’s @-handle on Twitter), they don’t have personal relationships with their users. That’s because social media users are not customers of them, because they don’t pay for them. And if you don’t pay, you’re the product being sold.

The actual customers of Facebook and Twitter are advertisers, not users. Because of this, social media has exactly the same un-visited problem that commercial broadcasting has had for the duration: its consumers and its customers are different populations. Financial accountability is to those that pay, which are advertisers, not users. Yes, there are moral and operational obligations to users, but economically speaking those obligations are lesser ones. They are those of a farmer to crops, not of a store to actual customers.

For now social media are a useful and popular way for customers to send messages to companies — and to route around inadequate customer service systems (or, in the vernacular of the trade, using sCRM routing around or to improve CRM) — the failures listed by Conversocial are not just those of companies ignoring social media, but of social media itself.

There is a structural problem as well, because social media are still only semi-personal. They are a weak substitute for direct contact — meaning that, in a person-to-person sense, even email and telephony are better.

Improving each company’s customer service systems and policies (which the Conversocial studies call for) also isn’t enough, because each company’s system is different, and all of them are silo’d. Thus the way you deal as a customer with Nordsrom, Safeway, Amazon and Apple are all different, and incompatible. If you want, say, to change your address or your phone number with all of them at once, you don’t have a single way to do that. You also don’t have a standard way to publish your own terms and conditions of engagement, to say for example “don’t track me outside of your own store or site” or “any data you collect is mine as well as yours, and should be available to me in the standard way I describe.”

Tools for doing that would have to live on your side of the relationship. Not the vendor’s, not the CRM cloud’s, and not Facebook’s. If you are a real customer, and not just a consumer or a user, you need your own tools. You need VRM — Vendor Relationship Management — tools, to work together with vendors CRM tools, not to replace them. The demand chain and the supply chain will work together.

The only case against VRM is that companies serving mass markets can’t afford to be personal, and just won’t go there. This was also the argument against PCs and the Internet. History and enterprising developers proved both cases wrong.

Bonus link: Alan Mitchell’s comment below. I love how he says social media marketing is among “the grandest imperialist invasions of them all. The attempt to occupy day-to-day human interaction and turn it into a profit centre.” Indeed.

For whatever reason, the people who run the tech companies want it. But eventually the users take it.

Either the companies learn how to take the lead from their users, or they will be sidelined. Unless the laws of technology are repealed, and I don’t think laws like that can be repealed.

It’s the Internet vs the Un-Internet. And the Internet, it seems, always prevails.

The Internet is each and all of us. It is no more reducible to the companies that try to control us than time is reducible to clocks.

I believe 2012 will be the year that Net-based companies (which are most of them at this point) will discover that free customers are more valuable than captive ones.

Here’s the deal: the Internet is already occupied: by all of us. This is why the Internet will beat the Un-Internet.

We occupy the Un-Internet as well, which is why we’re going to take charge of that too, and bring it in alignment with the free marketplace that the Internet provides in a remarkably pure form.

But we won’t be a crazy herd. We’ll be sources of help as well as money. And we’ll have our own ways of providing that help. The demand chain and the supply chain will start working together. Just watch.